The regulation application should not include the statement “We are creating a cryptocurrency platform”.
Are customers able to convert cryptocurrency into fiat? Can the platform be used to transfer virtual assets? Does the company access to client wallets as well as private keys? Are they administering a digital asset lending platform in the process of distributing tokens or managing a trading system?
These distinctions are critical when applying for an crypto-license in Georgia as the type of services a company plans to provide will affect its requirements for regulatory compliance and documentation, as well as control and capital requirements.
Georgia offers a regulated market for virtual assets that is appealing to fintech companies. However, entering the market requires much more effort than simply registering your business and then launching your site.
The definition of the service
Under the framework described by PB Services, businesses providing covered virtual asset services to third parties need to be registered as Virtual Asset Service Providers with the National Bank of Georgia.
The scope includes activities like virtual asset exchange and transfer along with trading platform administration and custody or management of cryptocurrency. As per the regulatory information supplied the custody concept encompasses the administration of a client’s private key and wallet.
That makes the technical design of a crypto product important to its position in the regulatory system.
Anyone who wants to apply for an crypto license in Georgia must sketch out the customer’s journey before preparing the request. What happens after a client deposits assets? Who manages the wallet? Are assets traded or transferred? Who is the person who authorizes a transaction?
It is important to be clear in your answers to establish what the firm will do.
Your business plan must describe the actual business
A VASP application also requires more than just a nice pitch deck.
According to the information provided, the National Bank requires a detailed plan of operation that includes financial projections for the minimum of three years. These include revenue, expense, and growth projections. The plan should also show that there is a real intention to run in Georgia.
This is a requirement that needs to be addressed as soon as possible.
A business model designed for investors will answer questions like how fast the company’s growth rate can be accelerated. The business plan for regulatory compliance should explain how the business will operate responsibly.
Georgian applicants for a vasp licence shouldn’t treat the commercial model as if it was unrelated. Instead they should link them.
AML is not possible to add at the end
PB Services describes the preparation as a sequence of steps that cover anti-money laundering, as well as counter-terrorism controls.
The information warns explicitly that the import of an AML Policy from another country won’t suffice since Georgian regulations must be integrated into a company’s framework.
It is also essential to consider the operational systems. The business plan should demonstrate that the system in place by the company is able to detect related and suspicious transactions from the start.
It is essential to consider compliance as a factor in product development. By creating a platform, then deciding how AML will work and how it will work, you could cause unnecessary delays and redesign.
Capital is contingent on the Services You Choose
Knowing the business model as early as is possible is crucial for a variety of reasons, including the requirement for capital.
In accordance with the thresholds specified in the sources, kiosks and exchange activities are required to be 150 000 GEL. The administration of trading platforms requires 350,000 GEL while other covered services need 250,000 GEL. The highest threshold applies for multiple services.
This is distinct from normal capital investment or operating capital. The application should be accompanied by proof of the amount required has been financed.
A founder planning to get crypto blockchain license in Georgia should consequently consider regulatory capital during financial planning not after the rest of the application has already been assembled.
Registration is not the end of the compliance process.
The calendar of compliance doesn’t end with approval. The requirements listed in the document outline regular obligations related to cybersecurity and risk management as well as technology resilience and risk of fraud as well as record retention, independent review and customer complaints.
To get an audit report from an independent auditor on the framework for risk management, a company must register within twelve months. The guidelines for handling complaints require businesses to accept complaints in written, oral or electronically, review them within a maximum of a month, and provide information about complaints electronically to the National Bank each month.
These factors affect how serious applicants must approach licensing.
Instead of thinking of a Georgian VASP application as a set of forms that must be completed to get permission, think of it as the design of an authorized business.
It is important that the company structure along with the technology, AML controls and regulatory capital, as well as the customer’s processes are in perfect harmony.
Georgia remains a wonderful place to start fintech and crypto businesses. The framework for regulation provides an easy path to market. However, asking how fast you can get a license is not the best way to begin.
You must be able explain in detail how your business’s crypto-related activities will be and show that you’re ready to comply with Georgia’s regulations.
